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Representations and Warranties Obligations and Corporate Guarantees (Tables)
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12 Months Ended |
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Dec. 31, 2012
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| Guarantees [Abstract] |
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| Outstanding Claims By Category And Product [Table Text Block] |
The table below presents unresolved repurchase claims at December 31, 2012 and 2011. The unresolved repurchase claims include only claims where the Corporation believes that the counterparty has a basis to submit claims. For additional information, see Whole Loan Sales and Private-label Securitizations Experience in this Note and Note 13 – Commitments and Contingencies. These repurchase claims do not include any repurchase claims related to the BNY Mellon Settlement regarding the Covered Trusts.
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Unresolved Repurchase Claims by Counterparty and Product Type |
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December 31 |
(Dollars in millions) |
2012 |
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2011 |
By counterparty (1, 2)
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GSEs (3)
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$ |
13,530 |
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$ |
6,221 |
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Monolines |
2,449 |
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3,082 |
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Whole-loan investors, private-label securitization trustees, third-party securitization sponsors and other |
12,299 |
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3,304 |
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Total unresolved repurchase claims by counterparty (3)
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$ |
28,278 |
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$ |
12,607 |
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By product type (1, 2)
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Prime loans |
$ |
8,793 |
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$ |
3,925 |
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Alt-A |
5,428 |
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2,286 |
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Home equity |
2,394 |
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2,872 |
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Pay option |
5,884 |
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1,993 |
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Subprime |
3,687 |
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891 |
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Other |
2,092 |
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640 |
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Total unresolved repurchase claims by product type (3)
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$ |
28,278 |
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$ |
12,607 |
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(1) |
Excludes certain MI rescission notices. However, at December 31, 2012 and 2011, included $2.3 billion and $1.2 billion of repurchase requests received from the GSEs that have resulted solely from MI rescission notices. For additional information, see Mortgage Insurance Rescission Notices in this Note.
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(2) |
At December 31, 2012 and 2011, unresolved repurchase claims did not include repurchase demands of $1.6 billion and $1.7 billion where the Corporation believes the claimants have not satisfied the contractual thresholds as noted on page 215.
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(3) |
As a result of the FNMA Settlement, $12.2 billion of these claims were resolved in January 2013.
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| Loan Repurchases And Indemnification Payments [Table Text Block] |
As presented in the table below, during 2012 and 2011, the Corporation paid $1.8 billion and $5.2 billion to resolve $2.1 billion and $6.2 billion of repurchase claims through repurchase or reimbursement to the investor or securitization trust for losses they incurred, resulting in a loss on the related loans at the time of repurchase or reimbursement of $847 million and $3.5 billion. Cash paid for loan repurchases includes the unpaid principal balance of the loan plus past due interest. The amount of loss for loan repurchases is reduced by the fair value of the underlying loan collateral. The repurchase of loans and indemnification payments related to first-lien and home equity repurchase claims generally resulted from material breaches of representations and warranties related to the loans’ material compliance with the applicable underwriting standards, including borrower misrepresentation, credit exceptions without sufficient compensating factors and non-compliance with underwriting procedures. The actual representations and warranties made in a sales transaction and the resulting repurchase and indemnification activity can vary by transaction or investor. A direct relationship between the type of defect that causes the breach of representations and warranties and the severity of the realized loss has not been observed. Transactions to repurchase or indemnification payments related to first-lien residential mortgages primarily involved the GSEs while transactions to repurchase or indemnification payments for home equity loans primarily involved the monoline insurers. The amounts shown in the table below do not include $1.8 billion in payments to settle monoline claims. The table below presents first-lien and home equity loan repurchases and indemnification payments for 2012 and 2011.
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Loan Repurchases and Indemnification Payments |
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December 31 |
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2012 |
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2011 |
(Dollars in millions) |
Unpaid
Principal
Balance |
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Cash Paid
for
Repurchases
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Loss |
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Unpaid
Principal
Balance |
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Cash Paid
for
Repurchases
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Loss |
First-lien |
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Repurchases |
$ |
1,184 |
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$ |
1,273 |
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$ |
389 |
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$ |
2,713 |
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$ |
3,067 |
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$ |
1,346 |
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Indemnification payments |
831 |
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425 |
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425 |
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3,329 |
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2,026 |
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2,026 |
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Total first-lien |
2,015 |
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1,698 |
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814 |
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6,042 |
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5,093 |
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3,372 |
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Home equity |
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Repurchases |
24 |
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24 |
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— |
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28 |
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28 |
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14 |
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Indemnification payments |
36 |
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33 |
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33 |
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99 |
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99 |
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99 |
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Total home equity |
60 |
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57 |
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33 |
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127 |
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127 |
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113 |
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Total first-lien and home equity |
$ |
2,075 |
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$ |
1,755 |
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$ |
847 |
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$ |
6,169 |
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$ |
5,220 |
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$ |
3,485 |
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| Rollforward Of Liability For Representations And Warranties [Table Text Block] |
The table below presents a rollforward of the liability for representations and warranties and corporate guarantees.
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Representations and Warranties and Corporate Guarantees |
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(Dollars in millions) |
2012 |
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2011 |
Liability for representations and warranties and corporate guarantees, January 1 |
$ |
15,858 |
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$ |
5,438 |
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Additions for new sales |
28 |
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20 |
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Charge-offs |
(804 |
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(5,191 |
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Provision |
3,939 |
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15,591 |
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Liability for representations and warranties and corporate guarantees, December 31 |
$ |
19,021 |
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$ |
15,858 |
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